Opening Titles and Closing Remarks

Update November 26^th: The Wall Street Journal is reporting this morning that Fidelity will buy Lawyers Title and Commonwealth Title. Also, LandAmerica and its 1031 Exchange Company filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. (thanks to Dave Wirshing)

In the short term, this is a good thing. Yesterday when national lenders reportedly stopped accepting LandAmerica policies, they were essentially dead in the water. Financial stability should no longer be a concern. Although there appeared little chance that LandAmerica's title underwriters would end up in regulatory reorganization, removing the specter of doubt about their financial condition benefits the entire title industry.

Long term, there are many uncertainties for title agents and their customers. I raised some of those questions in an earlier post which you can read here.

I am not surprised that Fidelity called off its acquisition of LandAmerica last Friday. Whether the continued deterioration of the market, undisclosed skeletons in the closet (under reserved claims) or just part of a Bill Foley master plan to permanently weaken a major competitor and cherry pick the leftovers, there were just too many possible problems for this merger to succeed.

LandAmerica's insurance company subsidiaries, Lawyers Title, Commonwealth Title and the others will probably remain in business as a result of the close regulatory environment in which they operate. But they will be smaller.

The holding company has financing and cash flow problems. According to reports it may well end up in bankruptcy. A bankruptcy proceeding would offer Fidelity, First American and others the opportunity to acquire the good assets without any or few of the corresponding liabilities. Acquiring bits and pieces may please insurance regulators and garner less Federal Trade Commission attention as well.

I am paying attention to what happens with LandAmerica's commercial business. Reports are that it is unable to access $290 million of invested assets relating to its 1031 exchange business and is exiting that line. Exchange business is closely tied to the still profitable commercial title business. I have to wonder whether this development essentially eliminates LandAmerica as a player in the big deals. The reinsurance market is also likely to be affected.

What the effect of the failed merger will be on title agents is also uncertain. Those agents that only represent LandAmerica companies may have a problem finding another underwriter in the current environment. Long term, not having two companies control 75 percent of the distribution channel for title insurance, will benefit title agents and their clients.

In the short term the title business is going to be further stressed as regulators, rating agencies and customers evaluate the situation and its effect on the title business.

"Huh?"

Deer in the headlights look. "Why would I want to do that?!?" "That's the silliest thing I've ever heard." A slight tilt of the head followed by a slowly uttered and cautious ". . . right."

If you've ever tried to sell someone on joining Twitter, you've probably encounter one or more of these reactions. What are you doing to get past them, close the deal, and get a friend or associate to sign up and begin launching your network?

The adult population here in Bloomington is in the early adopter stages of social media. A few professionals are on LinkedIn but mostly as a place to park their resume. Recently, Facebook is coming on strong within the real estate community. Most of the local Peeps though are either IT professionals or Indiana University students in the Informatics Department.

I'm enjoying Twitter even though I've few Bloomington based followers. Until a local network blossoms though, Twitter will be primarily recreational. I know it will take off eventually. I want to help hurry it along.

This minimum user environment is not unique, I'm sure. I'd like to hear from Active Rainers whose networks are now past this incubation phase. How did it happen? Was there a trigger for getting people over the hump, signed up and tweeting?

When I talk with friends and clients it's no different than any other sales problem. Identify the objection and remove it. Well the objection seems to be either it's silly or there's no one I know using it or what a waste of time.

Sharing my vision of the potential of Twitter is often met with a blank stare and a ". . . yeah . . . let me get back to you on that."

What is the catalyst that launched your network? What is that one benefit that turned a prospect into a Peep?

Thank you for sharing.

And if you want to follow me, that's OK too! http://twitter.com/johnbethell

Images purchased http://www.123rf.com/

Did you ever have one of those days where people and systems conspire to provide a really bad customer service experience? One that becomes a black hole of indifference sucking all your enthusiasm into a vortex of helplessness from which nothing escapes.

Welcome to my world yesterday. 

My journey into the void began early. I inconvenienced the inhabitants of a national bread, coffee, lunch and treats chains by wanting to purchase a "coffee to go" for ten and about a dozen assorted pastries. Feeling guilty for tying up the long line of caffeine and calorie seekers forming behind me I realized that the manager assigned only one of the six or seven employees to work the register. At least the treats were tasty. 

Later, not recognizing the approaching darkness, I decide to deal with an error message showing up in my payroll software. After entering information twice into online forms, the company finally grants me access to the treasured customer service telephone number.

The automated system asks for the same information before transferring me to a tech support group. The tech support voice system informs me that they are all too busy to help me anytime soon, and then advises me to check their web page. Surprisingly, a techie answered the phone only 30 seconds later and not surprisingly offers a $200 upgrade as the only solution to my problem. (This company recovered by responding to my anguished Twitter post and actually helping me. Cool!) 

Blindly going where no man had ever gone before, I travel out to the regional mall to acquire a gift card for an employee anniversary.  Four people are in the mall office. None are empowered to sell me a gift card. The anointed employee "would return in an hour and so should I." I went to a bank instead. 

My journey reminded me of an important lesson. Many poor customer service experiences are as a result of poor management, training and chosen customer service models. 

Managers choose to put employees into situations for which they are not trained or coached. Managers choose the preferred client interface with their company. Managers choose to ignore likely scenarios that may affect the ability of customers to get what they want. 

I renewed my vow to not be that kind of manager. I will train my employees. I will not steal time from clients to make my job easier. I will anticipate what may go wrong. I will be Ahead of the Curve!

My clients will not be sucked into the vortex!

-----

 Image courtesy http://www.123rf.com/

Steve Dalton commented on my last post that sometimes "title companies get in the way" of closing legitimate real estate purchases and refinances.

Title companies are at the bottom of the hill that is a real estate transaction.

And guess what? It all rolls down hill. Delays, misunderstandings, mistakes, and last minute stipulations get compressed as the closing date looms. And since the title company is the last one that generally has to do anything prior to closing, I'm not surprised, and even expect, that clients may feel that we get in the way from time to time.

What may seem as needless meddling in the consummation of the sale or refinance is usually the title company trying to resolve conflicting instructions received from one or more of the parties to the transaction.

Common conflicts between the Purchase Agreement and the Lender's Closing Instructions revolve around the Buyer's net cash back or net cash to close being outside the Lender's permitted tolerance, handling inspection and repair credits, and how the Seller's contribution towards closing cost is defined and set out on the HUD-1. In Indiana, the Purchase Agreement often requires prorating taxes in a way that is simply not possible given the inherent one to two year lag time of tax assessments.

We resolve all the conflicting instructions by requiring written clarifications and Amendments to the Purchase Agreement, Closing Instructions or Title Commitment.  If this process seems to you to be getting in the way of a closing, it's probably our fault for not explaining this correctly.

Just like you, we don't get paid unless the deal closes. Why would we want to make things needlessly difficult? We don't. All we're trying to do is resolve the conflicts so that we can close the transaction without compromising our fiduciary responsibilities to all the parties.

There's always a reason behind what a title company may require. If we don't explain it sufficiently keep asking until you understand. Sometimes, you can clear up a misunderstanding that will make things easier or even eliminate the requirement. As always, good communication is the key to a successful closing experience for you and your clients.

Good communication helps us dodge that rock at the bottom of the hill, too. For which we are eternally grateful.

Photo courtesy of Free Digital Photos. Net

Sorry short sellers, not GM, Ford and Chrysler. No, I'm talking about title insurance. 

LandAmerica, the nation's 3^rd largest title insurance group (Lawyers Title, Commonwealth Title and lesser titles) agreed last Friday to be acquired by Fidelity, the nation's 2^nd largest title insurance group (Fidelity National, Chicago Title and other titles). Over the next couple of weeks Fidelity will complete its due diligence and then complete the deal next year. 

Title Insurance is sold through a two-part distribution system. Underwriter owned offices sell about 40 percent of all title insurance and 60 percent is sold by independently owned title agencies (agents) under a contract with one or more underwriters. 

The Fidelity group will control about 45 percent of the combined national title insurance distribution system after the merger, as measured by 2007 American Land Title Association (ALTA) compiled statistics. The First American group controls 30 percent of the national distribution system. 

The whopping combined 75 percent share of control by just two industry players is worrisome. I hope that other title agents and title underwriters share my concern. Will customers of title industry take a long hard look at this Vegas wedding, too? Title insurance is too important to the free and efficient sale and mortgaging of real estate for them not to. 

Underwriters can exert significant control over an agent's business through the agency contract. The ability of agents to move business to another underwriter balances the relationship. Over the last 20 years underwriter consolidation reduced the choices for agents and the agent's clients. 

Underwriters are now less accommodating to agents on a variety of levels. Underwriters are unilaterally changing premium rates and splits, minimum remittances, underwriting coverage and territory. Bad agents are finally being cancelled because of poor performance. Good agents are being cancelled because they don't fit into some recently concocted metric. 

This merger will significantly affect what title agents can do to help their customers. Going forward, pricing, underwriting and service will be subject to less competitive pressures. Fidelity already announced plans to increase its rates nationwide. Won't that be easier now? 

This merger is probably a good thing for current LandAmerica policyholders. But with fewer choices, less competition and a narrowing distribution channel, will title agents and their customers benefit from this merger in the long run? 

The Federal Trade Commission and various state insurance regulators will review the merger. The effect of this merger on the national title insurance distribution system is unprecedented. Will this effect be considered if approval is granted? Ownership of property records databases, the historic concern of the FTC, should not be their only concern this time. The business objectives of the Big Two are identical today - cut costs and improve profits. Will this common objective lead to similar (albeit independent) market strategies limiting choices for agents and their customers.?

One thing is certain. The landscape of the title business is now irrevocably changed. Will it be a change for the better? Let me know what you think.

At John Bethell Title Company, Inc., we pride ourselves on staying Ahead of the Curve.  Anticipating the unexpected. Keeping our clients well informed. Well guys, I blew it on this one. I should have got this message out much sooner. I failed. I am profoundly sorry.  Fortunately, as I post this, there's still a few hours left for you avoid the humiliation and ridicule that will surely follow. Cancel your afternoon appointments and get right on this.

You see guys, today is National Men Make Dinner Day. I'm not making this up. (If it's on the Internet, it must be true, right?) I'm rushing to get this out so I only have time to highlight a few of the rules and protocols. You can read about this important day in its entirety at http://www.menmakedinnerday.com/home/index.php.

Here are a couple of the more important rules:

Rule #4: Main meal must include minimum of 4 ingredients and require at least one cooking utensil other than a fork.

Rule #8: Following recipe carefully, man starts to cook dinner! Apron is optional, tool belt is not allowed. (bonus points if recipe includes one of the following : capers, saffron, or the word 'scaloppini').

So why should men want to participate in this? Well the website offers the Top 10 Reasons, here are a couple of one's that to me stick out.

Reason #7: Whoever cooks, always gets the most attention from the family dog.

Reason #3: Some desserts, such as crème brulee, require the use of a propane torch. How cool is that?!!

So here's what I'll be doing tonight.

In case you're thinking you can finesse this with BBQ, here's the answer to whether that's permitted:  "No. Since the discovery of fire, men have laid claim to cooking over open flame. The challenge of working a typical kitchen is far greater and considered a more unfamiliar environment."

 My last BBQ it poured rain and I looked like this, so it's probably a good thing it's not permitted.

Again, I'm sorry for not getting this out sooner. I promise to do better next year. Stop back tomorrow and let me know how it went, OK?

Getting deals closed is increasingly frustrating. The current dynamic nature of loan programs and guidelines is making everything more difficult. The lightening rod for all of this is often the loan underwriter. I'll admit that more than once I've wondered why something is a problem on a deal where the buyer is putting 30 or 40 percent down.

I've tried to imagine what it must be like to be a loan underwriter now. Rather than incur my wrath, loan underwriters now engender my sympathy and understanding.

Many go to work in a large office with few people. Cubical ghost towns. Friends and coworkers fired in the past year. Are they next? Is their employer is going to make through the next quarter?

They may feel as if they don't know anything anymore. Most of the old loan programs are gone. The new programs change daily. Many of the people they have to deal with think they know everything, but they don't. Keeping up with it all must surely be stressful.

Managers are demanding that they be more productive. Yet, there are more checks and double checks in the process. New audit controls and reviews. Every decision they make is subject to after the fact second guessing. Most are prohibited from exercising any independent judgment.

I'm guessing that lawyers have rewritten some of their process guidelines. Lawyers are hired to save money, not make money. If something doesn't fit in the template we get bizarre instructions such as "You can't show the earnest money on the closing statement." True story.

I expect that whatever little appreciation is expressed for a job well done is lost in the tsunami of protests and complaints about other transactions. "What have you done for me lately?" times ten.

I'm coaching my employees to not get excited about constantly changing instructions and delays. We try to keep the communication lines open. We try to help everyone involved, realtors®, buyers and sellers to understand its part of the process right now.

If your next deal gets delayed in underwriting, don't be mad at the underwriter. They're just trying to live through this mess like the rest of us.

jb note 11/4 - This was originally posted 10/31 but disappeared for some reason. If you'd like to read the comments that have been posted, follow this link:

http://activerain.com/blogsview/767912/Who-wants-to-be-a-loan-underwriter-Not-me